Sony Third-Quarter Earnings: What to Watch

The logo of the Sony Corporation is displayed at an entrance to the company’s headquarters in Tokyo on July 30, 2015.

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Sony Corp. is scheduled to release its third-quarter earnings after the market closes in Tokyo on Friday. Here’s what you need to know:

EARNINGS FORECAST: Analysts expect ¥176.1 billion ($1.49 billion) profit ​for the October-December period, according to a FactSet poll of 20 analysts, down from ¥182.1 billion ​profit ​in the same period a year earlier.

REVENUE FORECAST: The electronics and entertainment giant is expected to report revenue of ¥2.52 trillion for the three months. That compares with ¥2.57 trillion a year ago.

WHAT TO WATCH

-EXCHANGE RATES: Volatility in financial markets late last year, especially the dollar’s swings against emerging-market currencies, might have hurt Sony’s earnings, analysts say. Still, they remain confident that Sony will achieve its goal of ¥140 billion net income for the full fiscal year ending in March, to which Chief Financial Officer Kenichiro Yoshida has committed.

-IMAGE SENSORS: Sony’s highly reputable image sensor business is expected to remain upbeat in the long run as smartphone makers are expected to release handsets with two rear-facing cameras, in addition to a beefed-up front-facing camera for selfies. But analysts are wary of adjustments to its image sensor production in the January-March period given the recent pessimism in the smartphone business, as indicated by Apple lackluster earnings outcome.

–PLAYSTATION: Sony sold more than 35.9 million PlayStation 4 videogame consoles since the product’s launch in November 2013, and analysts expect sales momentum to get stronger. The company forecasts it would ​ship 17.5 million videogame consoles in April-March, but analysts say the figure is likely to be revised up at the earnings announcement. Analysts say release dates and pricing plans for the PlayStation VR virtual-reality headset won’t be announced on Friday, and that is likely to be unveiled at the videogame industry’s conference in San Francisco in March.

–M&A: Sony has emerged as a potential bidder for Toshiba medical unit and for a stake in ​Japanese semiconductor manufacturer Renesas Electronics While analysts remain skeptical of the business synergies with Sony’s current portfolio, Sony has been active in terms of M&A recently. This week it announced it will buy Israel-based chip maker Altair Semiconductor for $​​212 million to further strengthen its enterprise-client business.

–SMARTPHONES: Sony’s Xperia smartphone business is struggling, and the company is undertaking a large-scale restructuring to make the unit profitable from the next fiscal period starting in April. Sony officials said implementation has been smooth, and added the company remains committed to the business.